Hyper-local news site Patch lays off hundreds more

AOL's former hyper-local news enterprise, Patch, which was handed over two weeks ago to investment firm Hale Global, announced today that hundreds more employees were laid off in a drastic reorganization.

Though I do not have any hard figures, many people saw this move coming due to the fact that Patch never made any money. I would really like to discuss this briefly in class. Many media experts say that "hyper-local" is where the media is headed, but clearly not in the case of Patch. What was wrong with their business model? What could they do/have done differently? Obviously Hale Global has some ideas, as they specialize in turning around companies through technological innovation.

The full story can be found in The New York Times, but blogger Jim Romenesko goes a little further and provides the firing announcement on his blog, along with testimonies from Patch employees. The announcement came to employees via a conference call from Patch's COO. How personal.

Romenesko claims that the "reorganization" eliminated as many as two-thirds of Patch's staff.

Can Online Journalism Still Rely on Ads?

This article, from the Wall Street Journal, brings up the point that ad money for online journalism is stretched thin. The article also points out that companies which shy away from the ad money as their primary source of revenue are proving to be more successful.

According to the article, "One industry executive estimated that pricing on standard banner display ads has fallen 30% to 40% over the past several years, while an ad buyer said the prices on ads sold through automated platforms have dropped by as much as 70% over the past five years."

There is a clear and steady increase in online ad sales, but the market
 is so crowded the revenues for each individual is falling

70 percent is a massive drop and this speaks volumes about the future of online journalism. News providers will need to find ways of generating revenue aside from the ads if they want to continue to operate.

Jim VandeHei, the president and CEO of Politico and Capital New York suggests in the article that, "most investors seeking big returns would be better off betting their money on other sectors, like health care or energy, unless they are 'passionate about journalism.'"

For journalism to survive, it will have to evolve past the old model of relying on ads to pay for content. What the new model will look like remains to be seen, but the examples of Vice and Buzzfeed, both of which are mentioned in the article show that it can be done.

The Web provides opportunity, but that has a down side as well

Ezra Klein has become a brand unto himself for the many who have become followers of his Wonkblog within the Washington Post. Now, like other high profile journalists, like David Pogue (late of the New York Times) and Walter Mossberg (leaving behind The Wall Street Journal), Klein is striking out on his own--sort of--under the umbrella of Vox Media, itself a venture seeking to find fortune in the digital media realm.

Jack Shafer, who writes a column on media matters for Reuters, is largely supportive of such moves. But he felt compelled in a current column to point out the forces aligned against the success of such a venture. He points out that while financial or legal barriers had protected newspapers and broadcasters for many years from competition, Klein and his like have no such "moats."

...the Web — so elemental in making Ezra Klein a big and sudden success — is also his biggest threat. None of the wildly successful websites — not the Huffington Post, the Gawker galaxy of sites, the BuzzFeed verticals, Glam Media’s properties, nor Vox Media — can rely on a moat to protect them from new competition because 1) no regulation prevents new Web entrants, 2) thanks to Moore’s Law and more, the costs of entry keep falling, and 3) unless tethered by contracts, talent can easily become new competitors... Giantism won’t protect most websites from competition any more than it did America Online 15 years ago.

In other words, the very forces that make is so easy--and relatively cheap-- for Klein to strike out on his own means that the next smart and talented writer who comes along could quickly erode whatever audience--and revenue--that Klein--or Pogue, or Mossberg, or..? has achieved.

Does this encourage or discourage you?

Acqui-hires: Good news or bad news for local entrepreneurs?

This article in the Boston Globe details a new trend in the technology startup world: acqui-hiring. Instead of a failing startup becoming a total loss, now successful technology companies are buying out companies, and hiring their most talented employees. The Globe cites the example of "Sold," a Boston startup that developed an app to help people sell their old electronic goods online. Before it tanked, Sold was acqui-hired by Dropbox, and the employees moved out to San Francisco.

The trend of acqui-hiring is a double-edged sword for Boston entrepreneurs. On the one hand, it provides struggling developers and creative minds with much-needed jobs. On the other hand, in most cases larger companies in California are moving Boston talent out West.

What do you guys think?

An entrepreneur goes to extremes to monetize social media marketing

Jason Sadler, now legally Jason SurfrApp and formerly Jason Headsetsdotcom, calls himself "the world's first human advertising network." The New York Times did a Q&A with him yesterday.

The 31-year-old web designer charges corporations and organizations a daily rate to wear their t-shirts in photos and videos he shares on social media sites like Facebook and Twitter. Jason boasts over 1,500 clients, including big brands such as Nissan and Starbucks. Jason said of the company's revenue:

"The first year, the company earned more than $66,000, and that has grown as IWearYourShirt.com has gotten millions of views."

A side project, as suggested in the first sentence, Jason also sells his last name online. Headsets.com bought it for $45,000 in 2012, and SurfrApp for $50,000 in 2013.

While Jason has more than 40,000 Twitter followers and 12,000 Facebook fans, these numbers are not particularly remarkable. I wonder if other prominent social media personalities will jump on the bandwagon, which will saturate the market causing consumers to feel burned out and weary of this new marketing strategy. I think this would be an interesting class discussion, because Jason seems to have very low costs (since the websites are already developed), and seems to be making a good living.

Start-Up Aereo found an opportunity in broadcast TV that had a technology fix--maybe

Aereo is an audacious technology play in the media space. If it can overcome a formidable legal challenge  it could be quite disruptive to the cozy broadcast television business model.


At one level, Aereo offers by subscription what is available for free: broadcast TV programming. That is, local channels for CBS, ABC, Fox, The CW and some others. The twist--for $8 per month--is to provide it to a subscriber's PC, tablet, or any other Internet connected device, without the need for a cable service or a local antenna.

The broadcast networks--and their local affiliated stations--are livid about this. They receive billions of dollars now form cable and satellite service in retransmission fees. They are concerned this might end if Aereo survives. The lower courts have upheld Aereo. Now, the Supreme Court has agreed to hear the case.

Aereo was started by Chet Kanojia, a serial entrepreneur -- also a Northeastern grad--who employed a novel technology to make the service possible without violating--as he sees it--copyright regulation.

The narrative for Aereo actually fits in  to several themes that have already been developed in our course. Can you identify them?

The 7 P’s of Kickstarter Marketing

Some amazing products with a lot of hype have failed to meet their Kickstarter funding goals. Wired's Gadget Lab takes a look at why the Etcher failed.

Here's a Kickstarter I found last year that almost doubled its funding goal: RaveNectar. RaveNectar's founder had already started several websites with huge social media followings, allowing him to cash in his social cred for real money.

AOL Goes to Great Lengths to Save Patch

In the current climate of dying newspapers and shrinking subscription bases, local reporting seems to be a lost cause. One of the only large companies that has been seriously fighting for traditional local reporting is AOL, believe it or not. Their website Patch, founded in 2007, is a network of over 900 community focused websites.

Patch was the brainchild of Tim Armstrong, a former Google CEO and current CEO of AOL. It was inspired when he noticed that there was no online sources of information about events happening in his hometown. It was acquired by AOL just after Armstrong became CEO and was meant to bring AOL into the modern age and away from its roots of scamming elderly people out of their retirement.

Unfortunately, the experiment seems to have been unsuccessful for AOL. According to this article from Reuters AOL has surrendered control of Patch to a joint venture with Hale Global a firm that, according to the article, specializes in saving online media companies. This is after Patch was forced to lay off about 50 percent of their employees last summer to meet the financial expectations of AOL.

Looking forward, the future of Patch is uncertain. The new joint venture has not announced how it plans to right the heavily listing ship that is Patch, but rest assured how they deal with this will speak volumes about the future of local reporting and community beats.

A new vision: How one entrepreneur changed his thinking about the blind

This article in the Washington Post talks about an entrepreneur who used voice of consumer feedback to be successful. Hyungsoo Kim developed a watch with braille numbers specifically for blind people. However, when he first brought it to focus groups he discovered that it wasn't what they wanted at all. He listened to how they wanted products that were inclusive instead of specifically designed for their disability.

Kim took feedback from his focus groups and started again at square one building a product that appeals to both people who are and are not blind. This product has been much more successful than his original design.

Kim found a niche market and solved a problem that blind people were having with their current watches. Now that he has a brand and some recognition within this market he can identif more problems or areas where new products are in demand. A few of his ideas are focused around the technological trend of touch screens, which don't work for people who cannot see the different buttons. Developing new products for this market will allow Kim to grow his business.

Learning From the Red Sox

This article is from a few weeks ago but it's still pretty interesting.

The story, from entreprenuer.com tells us what can be learned from last years Boston Red Sox in relation to our own business.

The story goes over three main points to take away from the Sox. They are not avoiding unpopular decisions, the importance of leadership, and learning from your mistakes.

The Red Sox went from worst in the AL East to a World Series championship in one year and their remarkable turnaround stemmed from many of the same type of things that make start up businesses successful.

NBC’s news division invests in short-form news startup

According to an article yesterday in the Media & Advertising section of The New York Times, NBCUniversal News Group announced today their partnership with NowThis News, "a start-up that creates short-form news segments tailored for distribution over social media sites like Vine, Instagram and Snapchat."

This move comes as media companies and broadcasting executives recognize that viewers are shifting from traditional and time-consuming television news consumption towards smartphone scanning, spending just a few seconds on each item - and that's if it catches their eye. Think of social platforms and apps like Twitter, Vine, Instagram, Digg, Flipboard and Snapchat, where news and entertainment is packaged into easily digested snippets to appeal to the always on-the-go and constantly connected consumer. NowThis News allows NBC's news content to be easily viewed and shared over these platforms.

NBC isn't the only media company catching on. AOL, Yahoo, and The Wall Street Journal are also investing in this growing business. NowThis News is backed by Kenneth Lerer. In what I found to be quite a jarring statement, Lerer tells The New York Times, “We are not doing long form, and by long form I mean anything over two minutes.” I am interested to see how this partnership manifests itself in my everyday news consumption.

Finding willing venture firm can feel like dating

CO Everywhere’s cofounder Tony Longo (right) with Melki Ko
and other employees.

One of the most critical steps of starting a venture--aside from the product or service itself--is securing the funding needed to support and grow the enterprise. Later in the semester we will spend some time on the avenues and options for obtaining venture capital. But this article from the Boston Globe on January 5, accurately describes a rather typical case. Not only did the founders need to persevere, but they also saw that they needed to substantially modify their initial product idea and even change the company's name.

One notion I have had trouble determining in entrepreneurs is the line between perseverance-- and stubbornness. At what point in pursuing an idea should one be willing to admit that, well, maybe this is just not a good idea, and move on?

Welcome to the Media Entrepreneurship Blog

Welcome to the this blog. It is a  forum for posting links to articles, thoughts and analysis on just about any subject relevant to entrepreneurship: funding, opportunities, risk, success cases, failure stories and so on.

On writing posts for a blog, you could check out this from a site called Problogger. The same source also writes about optimum length for a post, though not everything in this and elsewhere are always relevant in our context, such as SEO (blog-speak for Search Engine Optimization). Do keep your posts limited to one thought or topic. If you want to discuss two topics, use two posts. Keep in mind that your audience is not me so much as the colleagues in the class.